FanDuel plans to push California, Texas, and Florida to legalize sports betting in the coming years, parent company Flutter Entertainment announced during its investor day Wednesday. Mobile sports betting licensure in these states was implied in a presentation that assumed FanDuel’s sportsbook would have access to 80% of the U.S. population by 2030.
This bullish projection of a growing potential addressable market sent stock for Flutter (and rival DraftKings) soaring by more than 5% during market trading Wednesday. Extrapolating off current trends, licensure in the “Big Three states” would mean more than a million new long-term customers for the U.S. market leader, which already boasts four million users that place bets monthly.
This will also not come easily.
None of the nation’s three most populated states – which combined make up more than 25% of the U.S. population – offer competitive legal sports betting markets. The challenges for even a company as well financed and positioned as FanDuel seem, for now, nearly insurmountable – and even by 2030.
California sports betting status
The nation’s most populated state has been a major target for FanDuel (and the rest of the sports betting industry) since the 2018 Supreme Court decision that struck down the federal sports wagering ban. Its most notable shot did not hit.
In 2022, FanDuel and DraftKings led a group of sportsbooks to try to get California voters to approve legal mobile sports betting in one of the most expensive ballot measure campaigns in U.S. history. Despite more than a hundred million in spending from the sportsbooks, California voters overwhelmingly rejected the measure.
The commercial sportsbooks worked against the state’s tribal gaming stakeholders who had pushed for a separate retail-only sports betting ballot measure. The tribes spent tens of millions of dollars as well, most focused on defeating the mobile sports betting measure; neither measure passed, but the tribal initiative received more votes.
👀👀 FanDuel will revamp its push to launch in California, Texas and Florida, which combined represent more than 25% of the US population, per company presentation.
— Ryan Butler (@ButlerBets) September 25, 2024
This will be much easier said than done. pic.twitter.com/Cjw5dZ0HtI
The resounding defeat led the sportsbooks, particularly FanDuel and DraftKings, on what they have referred to as a public apology tour. As Indian Country reiterated its stance that any new gambling expansion must run through the California tribes, the commercial books began a lengthy reconciliation process with no timeline for completion.
There are no serious sports betting efforts in 2024. With the California legislature unlikely to take up such a complex issue, It remains to be seen if either group will look to try again on the 2026 ballot.
What is clear is that should FanDuel or any other commercial operator look to adopt California sports betting, it will come on the tribes’ terms.
How that shapes up leaves more questions. Tribes, as would any gambling stakeholder, are interested in expanding gambling offerings. But they are more concerned about protecting their existing capital and human investments – plus the generational well-being of their communities.
This dynamic, plus the strained relationships from the 2022 campaign, create significant roadblocks.
Texas sports betting status
Texas has no significant tribal gaming dynamics for legal sports betting. The political realities are no less daunting.
The Lone Star State remains one of the nation’s most notable gambling holdouts. It has no commercial casinos and only a handful of smaller tribal casinos far from the state’s major population center.
Conservative Texas politicians have continued generations of opposition to “moral vices” which for years limited legal alcohol consumption and has continued with gambling. Lt. Gov. Dan Patrick, the influential leader of the Texas state Senate, has perpetuated this tradition.
For those perusing the $FLTR investor deck's US TAM build, the righthand chart is notable. To get to 25% iGaming population access by 2030, you have to assume roughly one new state per year (depending, ofc, on states you select).
— Chris Krafcik (@ckrafcik) September 25, 2024
That happening—either linearly or lumpily—just… pic.twitter.com/j0dozv3PJ3
Patrick stopped a 2023 sports betting bill that had passed the Texas House with widespread bipartisan support. He has already said he will stop any future Texas sports betting efforts, as well as a proposal to build a resort casino in the Dallas-Ft. Worth area.
Even if Patrick and other anti-gambling politicians have a change of heart, any Texas casino or sportsbook signed off by lawmakers in 2025 would also have to earn approval from voters in 2026. However, that may be the least challenging component of Texas gambling; Texans for decades have flocked to casinos in neighboring Oklahoma and Louisiana, spending hundreds of millions annually.
Gambling advocates have hoped Texas’ expanding population and changing demographics can alter the conservative bent of state politics that have dominated for more than a century. Should Donald Trump reclaim the presidency this fall, Patrick appears to be a leading contender for a high-level federal position.
But if (or until) either (or both) occur, FanDuel’s hopes of a Texas will remain tied up by a handful of people.
Florida sports betting status
The only state on this list with legal sports betting may be the most difficult for FanDuel to enter.
The Seminole Tribe of Florida has exclusive rights to offer legal mobile and retail sports betting in the Sunshine State. The tribe could partner with other operators such as FanDuel, but the dynamics of such a relationship with a competitor – and the payments such a partner would have to remit – make a deal like this unlikely.
The other option is to circumvent the tribe and push for an amendment to the state constitution. FanDuel and DraftKings attempted this in 2020 without even getting the question on the ballot.
Should these (or any other book) try this again in 2026, they would face a range of challenges.
First would be collecting what would likely be close to one million verified signatures needed to make the ballot, something the two major sports couldn’t achieve last time around. Then they would need to get 60% of voters in that election to approve expanded sports betting in Florida.
It’s hard to get a supermajority of voters to agree to anything, let alone something as emotionally charged as gambling. And that’s without accounting for what would surely be a vigorous opposition campaign.
The Seminoles run some of the most lucrative casino gambling operations in the nation. They have used their financial and political clout in the state to keep out competition. They would use both resources to keep out rival sportsbooks; like California tribes, the Seminoles could frame these operators as out-of-state companies looking to take away jobs and money from Floridians.
Bottom Line
FanDuel’s rosy sports betting growth projections depend on launch in one or more of the nation’s three most populated states. Each presents unique challenges that have kept them from doing so already – and could very well prevent them for years to come.
